UBS Spends Big to Lure Top Brokers

Swiss banking giant UBS hired 200 brokers in the U.S. during the fourth quarter, according to Bloomberg News.

The bank poached a five-member team from the Dallas office of Goldman Sachs Group with $4 billion in assets under management, and a team of the same size from Morgan Stanley's Houston office with $2.1 billion in assets under management.

UBS was willing to write some big checks to attract these workers, Bloomberg says, paying signing bonuses that were as much as 260 percent of revenue of the brokers' revenue over the previous 12 months. That surpasses the 100 percent payouts Merrill Lynch paid brokers following the firm's sale to Bank of America.

The "super-sized" bonuses may alienate existing UBS brokers and increase attrition, Mindy Diamond, president of recruiter Diamond Consultants, told Bloomberg. Another consultant, Rick Peterson of Rick Peterson & Associates, said new hires will pay off over the next four to five years, indicating the bank is making a big bet on the U.S.

UBS is trying to stem the bleeding of clients from its private banking units which have come in the wake of $48.6 billion in writedowns and losses and amidst a federal investigation of whether the bank helped 20,000 Americans avoid U.S. taxes.

Meanwhile, Bloomberg notes, "The incentives to add advisers contrast with a more than 80 percent cut in the 2008 bonus pool at UBS, excluding U.S. brokers." The bank has cut 9,000 jobs since October 2007.